India faces more power outages due to coal shortages and rising demand


India is likely to face more power outages this year as utility coal stocks are at their lowest pre-summer level in at least nine years and power demand is expected to rise at its fastest rate in at least 38 years, officials and analysts say.

Power outages could stifle industrial activity in Asia’s third-largest economy just as economic activity began to recover after months of COVID-related lockdowns.

Electricity shortages as a percentage of demand have skyrocketed to 1.4% in the last week, a Reuters analysis of government data showed, higher than the 1% deficit in October, when India was last facing serious coal shortages. and the 0.5% shortfall in March.

The southern state of Andhra Pradesh, home to factories run by automakers like Kia Motors and drugmakers like Pfizer, is facing an 8.7% electricity shortfall, the data showed, prompting it to resort to widespread power outages .

Coal inventories at power plants early this fiscal year as of April 1 had an average inventory of nine days, the lowest since at least 2014. Federal guidelines recommend power plants average at least 24 days of inventory.

“The problem is that even after Coal India and the Ministry of Coal kept urging power plants to stock up, utilities continued to reduce their inventories,” said Rajiv Agarwal, secretary-general of the Indian Captive Power Producers Association.

Facor Alloys Ltd., a producer of ferrochrome used in the manufacture of stainless steel, said on Monday it had reduced production by 50% due to the power outages in Andhra Pradesh.

Developed states like Gujarat and Maharashtra have resorted to load-shedding, officials said, with government data showing eastern states like Jharkhand and Bihar, and northern Haryana and Uttarakhand, are reporting power outages of more than 3% each.

“A corresponding increase in power generation to meet increased demand is unlikely, limited by the availability of coal,” Fitch Ratings said in a statement Thursday.

Coal accounts for nearly 75% of India’s electricity generation.

A shortage of trains to deliver coal to power plants further exacerbates the supply crisis. The number of trains Indian Railways provides per day is 415, 8.4% less than the 453 required by the utilities.

The actual number of trains available from April 1 to April 6 was 379 per day, 16% less than required, according to Reuters-verified minutes of a meeting between the energy and coal ministries last week.


India’s energy needs are expected to rise sharply in the summer, with weather officials forecasting high-above-normal temperatures in many northern and central regions in April.

“An unprecedented change in weather has caused peak demand to skyrocket after midnight due to increased use of air conditioning,” said Harry Dhaul, director-general of the Independent Power Producers Association of India.

Total output is expected to grow 15.2% for the year to March 2023, a Reuters-audited note from the federal energy ministry shows, with demand expected to rise at the fastest rate in at least 38 years.

This is likely to boost coal-fired power generation by 17.6%, according to the release.

Higher power demand this year has already forced India to cut coal supplies to the non-power sector, despite record production and supply from Coal India Ltd, which produces over 80% of India’s coal.

Coal India is targeting a 4.6% increase in supplies to utilities this fiscal year to 565 million tonnes to stave off a shortage, according to another statement from the Energy Ministry.

But the forecast for power demand growth has prompted the Department of Energy to ask utilities to increase coal imports for blending to 36 million tonnes, the highest in at least six years.

The move could add to the financial woes of indebted electric utilities as global coal prices trade at high premiums to average levels due to the Russia-Ukraine crisis in 2021.

“High international coal prices would limit any significant increase in coal imports,” Fitch Ratings said, adding that domestic supplies could be impacted during the annual monsoon season.

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